Economy

Philadelphia Fed Survey: Manufacturers in Need of Skilled Employees

May 15, 2014

Indicators in the Federal Reserve Bank of Philadelphia May 2014 Business Outlook Survey were positive for the third consecutive month indicting manufacturing activity continues to expand in the Third District. The general activity index dropped slightly from 16.6 in April to 15.4 in May.

New orders and current shipments decreased by 4 and 9 points, respectively. The prices received index in May moved higher, jumping from 4.3 in April to 17.0. The prices paid index increased 12 points to 23.0 following three consecutive months of decline.

The employment index showed mild increase in May, moving up just 1 point for the month. The workweek index remained positive but dropped 2 points.

Manufacturers are optimistic about future growth. The future general activity index increased 11 points while the indexes for new orders and shipments picked up 7 and 6 points, respectively. The future employment index rose 9 points and 31 percent of firms are expecting employment expansion, up from 27 percent in April.

Manufacturers were asked supplemental questions regarding workforce issues. Approximately one third of those surveyed reported worker shortages and 46 percent felt worker skills were mismatched to their jobs. One third reported having job vacancies for more than 90 days. Increased recruitment efforts were high on the list for 66 percent of respondents and 56 percent were planning additional training for existing staff. Higher wages were offered as recruitment inducements by 34 percent of firms. Despite the skill shortages, only 4 percent said it contributed to production decreases.